Shane de Silva v The Commissioners for HMRC

When deciding whether to permit a late appeal, the tribunal must assess the length of the delay, the merits of the reasons for it, and the prejudice to each party. It must also give particular weight to efficient and proportionate litigation and respect for statutory time limits. The merits may be considered only to the limited extent necessary to form a general impression of obvious strength or weakness. Disputed or untested evidence should not ordinarily be assessed in detail. A tribunal must give adequate reasons, particularly where the parties have advanced competing legal or evidential analyses. A decision based on unexplained conclusions about prejudice or the apparent merits may amount to an error of law.

Shane de Silva appealed, with permission, against a decision of the First-tier Tribunal (Tax Chamber) refusing permission to notify late appeals against income tax assessments and related penalties and surcharges. The delay ranged from 551 to 1,338 days. The FTT applied the three-stage approach in William Martland v The Commissioners for HM Revenue and Customs but concluded that the reasons were not reasonable excuses, that there was little prejudice to the appellant, and that the underlying appeal appeared weak.

The appellant argued that the FTT had failed to engage with his case that no tax was due and had given inadequate reasons. The central issues were whether the FTT’s decision was one no properly directed tribunal could reach and whether its reasons were adequate.

1. Appeal allowed in substance. The FTT’s decision contained errors of law and was set aside. The Upper Tribunal re-made the decision and refused permission to notify a late appeal.
2. The applicable approach was that stated in William Martland v The Commissioners for HM Revenue and Customs. Permission should not be granted unless the appellant establishes that it should be. The tribunal must assess the length of the delay, the merits of the reasons given, and the prejudice caused to both parties. It must also give particular importance to efficient and proportionate litigation and respect for statutory time limits.
3. The underlying merits may be considered only in outline. The tribunal may take account of obvious strength or weakness, but should not conduct a detailed merits hearing. Disputed evidence should generally be excluded from that assessment, and untested evidence should not be assumed to be true.
4. The FTT had not adequately explained its conclusions that the appellant would suffer little prejudice and that the merits of the underlying appeal were dim. Those conclusions were central to the balancing exercise. The FTT had also described the issue as whether there was a reasonable excuse, whereas the required assessment was the merits of the reasons advanced for the delay. That wording risked introducing an additional and inappropriate binary test.
5. Under the approach to appellate error described in Edwards v Bairstow, the Upper Tribunal could intervene where no tribunal acting judicially and properly instructed could have reached the decision. The duty to give reasons, explained in Flannery & Anor v Halifax Estate Agencies Ltd, required the tribunal to engage with the competing analysis sufficiently to explain why it preferred one case over the other.
6. The appellant faced serious potential consequences, but had failed without good reason to respond substantively for a prolonged period. HMRC would suffer prejudice from having to re-open matters reasonably treated as closed. The appellant’s case had some potential merit, but was not overwhelmingly strong and depended on untested factual evidence. Balancing all the circumstances, permission was refused.

• Upper Tribunal (Tax and Chancery Chamber): [2021] UKUT 275 (TCC). The FTT’s decision was set aside for error of law and the decision was re-made, refusing permission to notify a late appeal.
• First-tier Tribunal (Tax Chamber): summary decision issued on 18 February 2020, with full reasons issued on 20 May 2020. Permission to notify late appeals was refused.